5 thoughts on “Guvernatorul valideaza concluziile unui raport FCA”

Today it seems like it – common knowledge. But if you read my analysis you would see that the REPO instrument is a recent one. NBR has used direct FX interventions to control RON volatility. In the same time, the REPO instrument was not used by the NBR to control FX volatility. I show that the NBR was worried about capital outflows and the FX depreciation was just a result of this action.

Everyone knows that the central bank uses the interest rate to control inflation. How many do know the mechanism and the timing?🙂

Mugur Isarescu talked about this explicitly in 2009-2010. One good outcome of the crisis, he thought, was the creation of a large and liquid government bond market, which would allow the BNR to pursue its monetary policy via more market-like, “orthodox”, mainstream schemes, typically used by other central banks, than the more “unorthodox” interventions, pressures and so on it had to rely on previously to do the job in the Bucharest money market.

I doubt that M.I. had in mind FX volatility when talking about the bond market. In fact it was the new depth of the bond market that led to the depreciation from April to July this year. there is nice grpah, maybe I’ll use it ECONNOMIA today, that shows govt bonds owned by Foreigners and the FX rate.

By using the REPO to control the F the NBR does not implement a more transparent and credible monetary policy. It just shows that every time will choose the instrument most relevant to influence the exchange rate – thus making the policy instrument a stochastic (random) variable.